Page 41 - Food&Drink Business Magazine July-August 2020

THERE has never been a better time to invest in production equipment. The new coronavirus-driven instant asset write-off of up to $150,000 means that food and beverage business owners effectively receive an instant 27.5 per cent discount on capex. As of June, the scheme was extended from the end of financial year to the end of 2020.
There is a whole host of
great packaging and processing production equipment that comes in at less than $150,000 cut-off (see pages 42-43).
For investments in kit over that amount, you can take advantage of a 50 per cent instant depreciation, which is similarly attractive. Both these schemes are effectively bringing forward depreciation from future years, but nonetheless represent a significant incentive to buy now.
The $150,000 write-off translates to a $41,250 discount on kit you buy for $150,000, providing that your net profit for the year is at least $150,000.
For bigger purchases the benefits are even larger. If, for instance, you bought a $2 million production line, you could depreciate 50 per cent of that against this year’s profits. If your profit was $1 million, you would be saving yourself an instant $275,000 on the cost of that new line.
$41,250
IS THE SAVING ON EVERY $150K SPENT UNDER THE INSTANT ASSET WRITE-OFF SCHEME.
The instant asset write- off scheme has been in place for five years. It was initially set at $20,000 a year, then
it went to $30,000, now the COVID-19 environment
has seen the Morrison government supercharge it to keep business moving.
The scheme has always been popular with small – and medium-sized business, but now it gives manufacturers real benefit on more than computers and cars. However, it is expected to cost the taxpayer $2.5bn over the next two years.
As at the time of writing, the caveats are that the $150,000 scheme will end on 31 December this year; and the equipment must be installed and running by the end of the year, not just on order. But that should be no problem; suppliers are not short of stock.
WHAT IS AVAILABLE?
The good news for food and beverage businesses is that there is a host of production equipment that comes in at less than $150,000. A selection of available solutions can be found onthefollowingpages. ✷
*Check eligibility with your accountant; Food & Drink Business is not providing tax advice.
✷
Q&A
MACHINERY BUSINESS
$150,000 SCHEME
• Who qualifies? Any business with turnover less than $500m.
• When does it run from? 12 March this year.
• When does it run to? 31 December, 2020.
• Is that when kit has to be ordered by or installed? Installed.
• How do I claim? On your tax return as normal.
• Is it just for one asset? No, multiple assets for multiple $150,000s can be claimed for.
• Who pays? It will cost the taxpayer $2.5bn.
• What qualifies? Almost anything a food and beverage company needs. • Is it only for new kit? No, it can be
used for pre-owned equipment. • What happens if I miss the
31 December deadline? The instant
write-down will then be 50 per cent. • What if the kit I want is more than
$150,000? The instant write- down will then be 50 per cent.
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